EVA And Its Application In Enterprise's Valuation

With the growing perfection of the capital market of China, the investors are tending to be rational, and the value-based investment analysis is attracting more and more attention. How to value the performance of listed companies in an objective and reasonable manner has turned out to be a major issue in the current theory and practice of securities investment. The way of evaluating corporations which bases on EVA provides us a useful path to judge and analyze the value of a corporation.EVA is a performance evaluation index newly emerged in western countries since 1980s. Devoid of the limitations of the traditional indexes, EVA reflects with considerable accuracy the value that an enterprise creates for its shareholders in a certain period. The simplest definition of EVA is the surplus profit after deducting the cost of the liabilities and the shareholders'equity from net operating profits. The most prominent advantage of EVA lies in that it takes the cost of all production elements into consideration.Here I combine the theoretical and factual analysis to introduce EVA and its application. There are four chapters in this thesis. The first chapter is a foreword introducing the background and significance. The second chapter introduces the provenance, development and caculation of EVA and its comparison with traditional accounting indexes. The third chapter is about the theory and method of companies'evaluation. It mainly introduces EVA valuation model and lists the advantage of EVA by comparing it with cash flow model. The fourth chapter is about the application of EVA, especially its application in the evaluation of listed company FuYaoGroup.The application of EVA valuation model can not only reflect the value of companies accurately, but also leads the governors to make a point of value management to promote the development of companies.